GSA’s Y2K: When We Can’t Give Money Away

GSA’s Y2K: When We Can’t Give Money Away

The United States government’s system for distributing and monitoring money is broken. On April 4, 2022, the cornerstone upon which all federal grants and contracts have been built, the D-U-N-S number (DUNS), was replaced with the Unique Entity Identifier (UEI).1 The transition has been disastrous and could not come at a worse time. In addition to normal fiscal year spending, the federal government has an extra $7 trillion in COVID-19 recovery dollars to distribute and monitor. From March 2020 to June 2022, a span of just 27 months, the federal government added $7 trillion beyond standard operating funds to help the country respond to and recover from the global COVID-19 pandemic. Comparatively, it took the government 215 years, from George Washington to George W. Bush, to reach $7 trillion in debt.

Instead of responsibly scaling and improving efforts, Government Services Administration (GSA), the government agency responsible for managing and supporting federal agencies, will be focused on fixing problems related to transitioning the system from DUNS to UEI, resulting in severe disturbances to the federal government’s grantmaking, procurement, and management systems. These disturbances will undoubtedly trickly down and negatively impact every federal, state, and local government agency as well as any business, nonprofit, or faith-based organization doing business with the federal government for the foreseeable future.

This self-inflicted disaster first came to my attention when my colleagues at Simple Grants reported having trouble registering clients in SAM.gov, the System for Award Management, which is the first step in doing business with the federal government. Previously, obtaining a DUNS number from Dun & Bradstreet was the initial step in registering. This relationship had been in place since 1978. Dun & Bradstreet, an American company with $2.1B in revenue in 2021 would identify and validate/verify federal contractors using the DUNS number. Think of the DUNS number as a social security number for an entity.

Having a DUNS number became a requirement for all grantees in 2003, and, in 2008, the requirement expanded to all federal financial assistance, affecting over 630,000 public and private entities. As a result, the cost for the federal government to use DUNS skyrocketed to over $131M across eight years1. Calls to reduce costs and eliminate reliance on a third-party vendor gained volume, such that, in March of 2018, GSA opened the contract to new vendors.

In 2019, GSA awarded a five-year, $41.7M contract to Ernst & Young to administer and oversee the transition from DUNS to UEI and to oversee entity verification.1 Unrelated, but concerningly relevant, Ernst & Young was just fined $100M in June of this year, which is the largest civil penalty for an audit firm in US history, for encouraging employees to cheat on an industry-required ethics exam. Nevertheless, they are now responsible for ensuring the fidelity of federal spending.

The official switch from DUNS to UEI has been fraught with complications and long delays well beyond the typical timeline, and GSA has said very little. GSA and the Office of Management & Budget gave federal agencies until December 2021 to recode all internal systems to comply with the new UEI process. However, many federal agencies missed the deadline, resulting in GSA extending its contract with Duns & Bradstreet, so they could continue to use DUNS alongside UEI at least through the new deadline of April 4, 2022.

Since the official switch on April 4, entity verification, a process that previously took no more than two days, is now taking weeks or longer in some cases. The new internal verification process administered by Ernst & Young is unable to verify an address automatically if any other business is also registered to that address, which is often the case in office buildings. When this happens, registrants must create a help ticket and wait for customer service to respond, which is taking weeks. If an entity has a minor discrepancy in its paperwork, like a comma in one document, but not another, the system will reject the registration and move the entity to a red-flagged pile that is a blackhole.

Since the official switch on April 4, entity verification, a process that previously took no more than two days, is now taking weeks or longer in some cases. The new internal verification process administered by Ernst & Young is unable to verify an address automatically if any other business is also registered to that address, which is often the case in office buildings. When this happens, registrants must create a help ticket and wait for customer service to respond, which is taking weeks. If an entity has a minor discrepancy in its paperwork, like a comma in one document, but not another, the system will reject the registration and move the entity to a red-flagged pile that is a blackhole.

Multiple GSA customer services representatives have reported to Simple Grants consultants that they are overwhelmed, know the system is broken, and do not have a timeline for when it will be fixed. Even when our clients provide requested documents, like articles of formation, to validate an address, representatives are still unable to complete the registration process. One client, who had flawless paperwork, had to wait 61 days to successfully register.

To make matters worse, federal agencies are issuing inconsistent guidance about how potential grantees should respond. The following is standard language included in most notices of funding availability across every federal agency: “If you are unable to submit an application on Grants.gov by the application deadline because you do not have an active SAM registration, you will not be considered for funding.”1 In almost 20 years of working with grants, I have never seen an exception to this rule until April 29, almost a month after the official switch to UEI, when the National Institute of Health, one the largest federal grantmaking agencies, issued the following guidance:

Organizations that do not have an active SAM registration cannot be issued an NIH award. Under normal circumstances, the NIH Late Application Policy does not allow late submissions due to failure to complete or renew required registrations. At this time, SAM.gov is experiencing system challenges that have the potential to impact all applicants and recipients across the Federal government. Due to the scope of these challenges, NIH is making an exception to the Late Application Policy until the issue is resolved. Effective immediately, if an entity does not have a current SAM registration or renewal at the time of the application submission due date, NIH will accept late applications within the two-week late window as long as the entity has submitted all SAM registration or renewal documentation at least two weeks prior to the application due date and all other aspects of the application are compliant and consistent with the funding opportunity announcement requirements. To be considered under this special accommodation, the entity’s application Cover Letter must include documentation, such as a confirmation email or screenshot, demonstrating that the SAM registration or renewal request was submitted prior to the application due date. Requests for accommodations beyond the two-week late window will be considered on a case-by-case basis. Permission to submit late will not be given in advance. Therefore, applicants must ensure their Cover Letter attachment documents a good faith attempt to resolve SAM issues in a timely manner and includes any relevant correspondence with GSA.1

NIH has basically abandoned SAM.gov and is asking applicants to spend countless hours and dollars preparing highly technical proposals in the hopes they will be considered, while also asking applicants to substantiate their attempts to register in a system they know is broken. NIH even attempted to establish a two-week deadline for accommodations, but then agreed to arbitrarily assess submissions on an as needed basis.

The Department of Energy recently did the same thing, waiving its registration requirement days before the deadline of a major new grant program. The Alabama Governor’s Office and the Alabama Department of Economic and Community Affairs (ADECA) issued a joint statement on July 12, 2022, waiving the requirement that units of local government have a UEI number to compete for Community Development Block Grants, funding from the US Department of Housing and Urban Development (HUD) that flows through state agencies to units of local government.

Many agencies have not released statements or guidance and require potential applicants to contact federal program officers for an individual, arbitrary determination. Worse yet, others, like the National Science Foundation (NSF), are simply not allowing applicants without current SAM registration to apply. The lengthy delay in registration has precluded otherwise qualified clients from competing for funds.

In addition to the harm done to those seeking to register for the first time, we learned in mid-July that as many as 20% of active contractors and grantees are also unable to obtain a UEI, preventing them from being paid. 1 Rep. Gerry Connolly (D.–Va.), chairman of the Oversight and Reform Subcommittee on Government Operations, wrote to GSA on July 15 stating, “I write with serious concerns about the General Services Administration’s (GSA) efforts to transition federal contractors to a new online identification system for the federal government’s federal awards process. According to many of my constituents, they have encountered significant difficulty in migrating their existing contractor accounts into the new framework, jeopardizing their businesses and their ability to pay their workers.” Harming organizations by not allowing them to compete is one thing, but denying them payment for services or products already rendered is wholly another. The problem is spiraling out of control and is likely much more serious than GSA anticipated.

In addition to the problems with entity verification, the larger problem GSA is facing is similar to what happened during the Y2K crisis, when financial systems had to be recoded to include a four-digit year or risk crashing the world’s financial infrastructure. A successful transition from DUNS, which is 9 numbers, to UEI, which is 12-digital alphanumeric, requires analyzing and testing every government and non-governmental system that processes contracts, grants, or financial transactions and recoding them to accept the new identifier, along with the old, as a myriad of historical records would be useless if the DUNS were completely erased. Unlike the Y2K crisis though, where private interests alerted everyone well in advance to the possible doomsday to prepare, government bureaucrats have quietly plotted this transition with what appears to be little input from nor consideration for the many non-governmental end users this transition will impact.

As the disaster continues to unfold, not only is the $7.2T in recovery money not being administered promptly, as of August 2, almost one-third or $2.48T has yet to even be allocated1. Doing business with the federal government has never been easy, but the recent changes have added unreasonable and unnecessary burdens on already struggling private sector and government entities. GSA needs to act immediately to notify stakeholders, including the public, about the scope of the problems and present a plan to fix them. Simple Grants is following this transition closely and will provide updates on our Resources page and newsletter. If you want to stay updated on progress visit our website at SimpleGrants.com and subscribe. If you had trouble registering in SAM.gov or Grants.gov, we want to hear from you. Click here to share your story privately with Simple Grants to help us monitor the situation and to see if we can help.


 

  1. Unique entity identifier update. GSA. (2019, June 18). Retrieved August 12, 2022, from https://www.gsa.gov/about-us/organization/federal-acquisition-service/office-of-systems-management/integrated-award-environment-iae/iae-systems-information-kit/unique-entity-identifier-update
  2. GSA Announces Award for Entity Validation Services. GSA. (2019, April 19). Retrieved August 12, 2022, from https://www.gsa.gov/about-us/newsroom/news-releases/gsa-announces-award-for-entity-validation-services
  3. GovInfo. (2021, December 27). https://www.govinfo.gov/app/details/FR-2021-12-27/summary
  4. U.S. Department of Health and Human Services. (n.d.). Not-OD-22-119: NIH response to registration issues in Sam.gov. National Institutes of Health. Retrieved August 12, 2022, from https://grants.nih.gov/grants/guide/notice-files/NOT-OD-22-119.html
  5. Miller, J. (2022, July 18). Growing frustrations puts GSA on hot seat to fix the transition to UEI. Federal News Network. https://federalnewsnetwork.com/reporters-notebook-jason-miller/2022/07/growing-frustrations-puts-gsa-on-hot-seat-to-fix-the-transition-to-uei/
  6. www.covidmoneytracker.org

 

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GSA’s Y2K: When We Can’t Give Money Away

GSA’s Y2K: When We Can’t Give Money Away

The United States government’s system for distributing and monitoring money is broken. On April 4, 2022, the cornerstone upon which all federal grants and contracts have been built, the D-U-N-S number (DUNS), was replaced with the Unique Entity Identifier (UEI).1 The transition has been disastrous and could not come at a worse time. In addition to normal fiscal year spending, the federal government has an extra $7 trillion in COVID-19 recovery dollars to distribute and monitor. From March 2020 to June 2022, a span of just 27 months, the federal government added $7 trillion beyond standard operating funds to help the country respond to and recover from the global COVID-19 pandemic. Comparatively, it took the government 215 years, from George Washington to George W. Bush, to reach $7 trillion in debt.

Instead of responsibly scaling and improving efforts, Government Services Administration (GSA), the government agency responsible for managing and supporting federal agencies, will be focused on fixing problems related to transitioning the system from DUNS to UEI, resulting in severe disturbances to the federal government’s grantmaking, procurement, and management systems. These disturbances will undoubtedly trickly down and negatively impact every federal, state, and local government agency as well as any business, nonprofit, or faith-based organization doing business with the federal government for the foreseeable future.

This self-inflicted disaster first came to my attention when my colleagues at Simple Grants reported having trouble registering clients in SAM.gov, the System for Award Management, which is the first step in doing business with the federal government. Previously, obtaining a DUNS number from Dun & Bradstreet was the initial step in registering. This relationship had been in place since 1978. Dun & Bradstreet, an American company with $2.1B in revenue in 2021 would identify and validate/verify federal contractors using the DUNS number. Think of the DUNS number as a social security number for an entity.

Having a DUNS number became a requirement for all grantees in 2003, and, in 2008, the requirement expanded to all federal financial assistance, affecting over 630,000 public and private entities. As a result, the cost for the federal government to use DUNS skyrocketed to over $131M across eight years1. Calls to reduce costs and eliminate reliance on a third-party vendor gained volume, such that, in March of 2018, GSA opened the contract to new vendors.

In 2019, GSA awarded a five-year, $41.7M contract to Ernst & Young to administer and oversee the transition from DUNS to UEI and to oversee entity verification.1 Unrelated, but concerningly relevant, Ernst & Young was just fined $100M in June of this year, which is the largest civil penalty for an audit firm in US history, for encouraging employees to cheat on an industry-required ethics exam. Nevertheless, they are now responsible for ensuring the fidelity of federal spending.

The official switch from DUNS to UEI has been fraught with complications and long delays well beyond the typical timeline, and GSA has said very little. GSA and the Office of Management & Budget gave federal agencies until December 2021 to recode all internal systems to comply with the new UEI process. However, many federal agencies missed the deadline, resulting in GSA extending its contract with Duns & Bradstreet, so they could continue to use DUNS alongside UEI at least through the new deadline of April 4, 2022.

Since the official switch on April 4, entity verification, a process that previously took no more than two days, is now taking weeks or longer in some cases. The new internal verification process administered by Ernst & Young is unable to verify an address automatically if any other business is also registered to that address, which is often the case in office buildings. When this happens, registrants must create a help ticket and wait for customer service to respond, which is taking weeks. If an entity has a minor discrepancy in its paperwork, like a comma in one document, but not another, the system will reject the registration and move the entity to a red-flagged pile that is a blackhole.

Since the official switch on April 4, entity verification, a process that previously took no more than two days, is now taking weeks or longer in some cases. The new internal verification process administered by Ernst & Young is unable to verify an address automatically if any other business is also registered to that address, which is often the case in office buildings. When this happens, registrants must create a help ticket and wait for customer service to respond, which is taking weeks. If an entity has a minor discrepancy in its paperwork, like a comma in one document, but not another, the system will reject the registration and move the entity to a red-flagged pile that is a blackhole.

Multiple GSA customer services representatives have reported to Simple Grants consultants that they are overwhelmed, know the system is broken, and do not have a timeline for when it will be fixed. Even when our clients provide requested documents, like articles of formation, to validate an address, representatives are still unable to complete the registration process. One client, who had flawless paperwork, had to wait 61 days to successfully register.

To make matters worse, federal agencies are issuing inconsistent guidance about how potential grantees should respond. The following is standard language included in most notices of funding availability across every federal agency: “If you are unable to submit an application on Grants.gov by the application deadline because you do not have an active SAM registration, you will not be considered for funding.”1 In almost 20 years of working with grants, I have never seen an exception to this rule until April 29, almost a month after the official switch to UEI, when the National Institute of Health, one the largest federal grantmaking agencies, issued the following guidance:

Organizations that do not have an active SAM registration cannot be issued an NIH award. Under normal circumstances, the NIH Late Application Policy does not allow late submissions due to failure to complete or renew required registrations. At this time, SAM.gov is experiencing system challenges that have the potential to impact all applicants and recipients across the Federal government. Due to the scope of these challenges, NIH is making an exception to the Late Application Policy until the issue is resolved. Effective immediately, if an entity does not have a current SAM registration or renewal at the time of the application submission due date, NIH will accept late applications within the two-week late window as long as the entity has submitted all SAM registration or renewal documentation at least two weeks prior to the application due date and all other aspects of the application are compliant and consistent with the funding opportunity announcement requirements. To be considered under this special accommodation, the entity’s application Cover Letter must include documentation, such as a confirmation email or screenshot, demonstrating that the SAM registration or renewal request was submitted prior to the application due date. Requests for accommodations beyond the two-week late window will be considered on a case-by-case basis. Permission to submit late will not be given in advance. Therefore, applicants must ensure their Cover Letter attachment documents a good faith attempt to resolve SAM issues in a timely manner and includes any relevant correspondence with GSA.1

NIH has basically abandoned SAM.gov and is asking applicants to spend countless hours and dollars preparing highly technical proposals in the hopes they will be considered, while also asking applicants to substantiate their attempts to register in a system they know is broken. NIH even attempted to establish a two-week deadline for accommodations, but then agreed to arbitrarily assess submissions on an as needed basis.

The Department of Energy recently did the same thing, waiving its registration requirement days before the deadline of a major new grant program. The Alabama Governor’s Office and the Alabama Department of Economic and Community Affairs (ADECA) issued a joint statement on July 12, 2022, waiving the requirement that units of local government have a UEI number to compete for Community Development Block Grants, funding from the US Department of Housing and Urban Development (HUD) that flows through state agencies to units of local government.

Many agencies have not released statements or guidance and require potential applicants to contact federal program officers for an individual, arbitrary determination. Worse yet, others, like the National Science Foundation (NSF), are simply not allowing applicants without current SAM registration to apply. The lengthy delay in registration has precluded otherwise qualified clients from competing for funds.

In addition to the harm done to those seeking to register for the first time, we learned in mid-July that as many as 20% of active contractors and grantees are also unable to obtain a UEI, preventing them from being paid. 1 Rep. Gerry Connolly (D.–Va.), chairman of the Oversight and Reform Subcommittee on Government Operations, wrote to GSA on July 15 stating, “I write with serious concerns about the General Services Administration’s (GSA) efforts to transition federal contractors to a new online identification system for the federal government’s federal awards process. According to many of my constituents, they have encountered significant difficulty in migrating their existing contractor accounts into the new framework, jeopardizing their businesses and their ability to pay their workers.” Harming organizations by not allowing them to compete is one thing, but denying them payment for services or products already rendered is wholly another. The problem is spiraling out of control and is likely much more serious than GSA anticipated.

In addition to the problems with entity verification, the larger problem GSA is facing is similar to what happened during the Y2K crisis, when financial systems had to be recoded to include a four-digit year or risk crashing the world’s financial infrastructure. A successful transition from DUNS, which is 9 numbers, to UEI, which is 12-digital alphanumeric, requires analyzing and testing every government and non-governmental system that processes contracts, grants, or financial transactions and recoding them to accept the new identifier, along with the old, as a myriad of historical records would be useless if the DUNS were completely erased. Unlike the Y2K crisis though, where private interests alerted everyone well in advance to the possible doomsday to prepare, government bureaucrats have quietly plotted this transition with what appears to be little input from nor consideration for the many non-governmental end users this transition will impact.

As the disaster continues to unfold, not only is the $7.2T in recovery money not being administered promptly, as of August 2, almost one-third or $2.48T has yet to even be allocated1. Doing business with the federal government has never been easy, but the recent changes have added unreasonable and unnecessary burdens on already struggling private sector and government entities. GSA needs to act immediately to notify stakeholders, including the public, about the scope of the problems and present a plan to fix them. Simple Grants is following this transition closely and will provide updates on our Resources page and newsletter. If you want to stay updated on progress visit our website at SimpleGrants.com and subscribe. If you had trouble registering in SAM.gov or Grants.gov, we want to hear from you. Click here to share your story privately with Simple Grants to help us monitor the situation and to see if we can help.


 

  1. Unique entity identifier update. GSA. (2019, June 18). Retrieved August 12, 2022, from https://www.gsa.gov/about-us/organization/federal-acquisition-service/office-of-systems-management/integrated-award-environment-iae/iae-systems-information-kit/unique-entity-identifier-update
  2. GSA Announces Award for Entity Validation Services. GSA. (2019, April 19). Retrieved August 12, 2022, from https://www.gsa.gov/about-us/newsroom/news-releases/gsa-announces-award-for-entity-validation-services
  3. GovInfo. (2021, December 27). https://www.govinfo.gov/app/details/FR-2021-12-27/summary
  4. U.S. Department of Health and Human Services. (n.d.). Not-OD-22-119: NIH response to registration issues in Sam.gov. National Institutes of Health. Retrieved August 12, 2022, from https://grants.nih.gov/grants/guide/notice-files/NOT-OD-22-119.html
  5. Miller, J. (2022, July 18). Growing frustrations puts GSA on hot seat to fix the transition to UEI. Federal News Network. https://federalnewsnetwork.com/reporters-notebook-jason-miller/2022/07/growing-frustrations-puts-gsa-on-hot-seat-to-fix-the-transition-to-uei/
  6. www.covidmoneytracker.org

 

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GSA’s Y2K: When We Can’t Give Money Away

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